10 January 2020

Estonia’s digital state shows the way for Whitehall reform


It’s easy to be cynical about Dominic Cummings and his desire to shake up the workings of government. His much-discussed ‘Two Hands are a Lot’ blog has caused many people much more familiar than me with the intricate workings of government to brand his efforts naive or misdirected.

And yet, this isn’t an opportunity to let pass by – we should not let skepticism blind us to the fact that there are successful models out there to follow. Models such as Estonia.

Estonia shows that radical reform of a state is possible. Their much-lauded e-Governance means that citizens’ interactions with the government are mostly done online, including for businesses. Estonia of course had the unenviable ‘advantage’ of starting with a blank slate and none of the bureaucratic, technological and cultural legacies that can hold back reforms. But it also had the disadvantage of doing it before any other country had tried it – they had to invent the wheel, while we just need to copy it.

The relationship between the state and business owners in the UK and Estonia is starkly different. For example, in the UK the National Audit Office (NAO) has found that there are more than 20 ways of identifying individuals and businesses across 10 departments and agencies, with no standard format for recording data such as name, address and date of birth. This wastes business owners’ time, and leads to delays and errors. It also means that the government doesn’t understand the UK business population as well as it could.

In contrast, Estonia’s X-Road – the keystone of Estonian digital society since 2001 – allows the nation’s various public and private sector systems to link up so business owners don’t need to keep inputting the same data. The prize for successful reform is significant: in Estonia, it is estimated that this saves business owners around 12 million hours every year.

The once-only principle is a neat way to ensure government departments fall in line. It means that citizens, institutions, and companies only have to provide information to the authorities and administrations once.

There is no reason why the UK couldn’t copy Estonia. In fact, since 2016 X-Road has been available as open source under an MIT License. The UK was considering adopting it back in 2013. Finland, Iceland and the Faroe Islands are already signed up.

Attracting talent to the UK after Brexit will be vital. After all, 49% of the UK’s fastest-growing startups have at least one immigrant co-founder. Estonia has an e-Residency card that lets entrepreneurs start and run a company – even if they are outside the country. This attracts digital entrepreneurs who are able to register, sign contracts and access business banking and online payment providers. At the margin, this will attract more entrepreneurs to make a home in the UK – after all, it was utilised by the winners of Mayor of London’s Entrepreneur’s Competition 2017 to avoid Brexit complications.

Estonia’s model of e-Governance has been a process of multiple iterations. Within a generation they went from a country with extremely limited internet access to people being able to pay tax (e-Tax), vote (i-Voting), store their health records (e-Health), and even live remotely (e-residency).

We need not adopt the whole package – for example, voting online feels like an unnecessary step, not least because of the pleasure we seem to get from the ritual of the voting booth. And while ID cards will understandably be unacceptable to the general public due to their connection with totalitarian states, as long as there is a secure way for business owners to identify themselves (something we already do with our bank accounts), then they would relish the opportunity to have secure identification for their business to deal efficiently with the government.

Yes, we have legacy issues to overcome; yes, there are limits to the level of digitisation the public will accept (as we have seen with Making Tax Digital); yes, we also need ministers who understand reform; and yes, changing the way government works will be hard. Nevertheless, the prize is huge and Estonia proves that sometimes cynicism isn’t the best policy.

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Philip Salter is the founder of The Entrepreneurs Network